Majority of inheritance advisors say they have seen clients who have been victims of financial abuse, according to a new STEP report
The majority of solicitors and professionals who help plan their clients’ estates have either seen instances of actual or suspected financial abuse, according to a new report from STEP, the global professional body for inheritance advisors. STEP’s Loss of Mental Capacity: A Global Perspective report has found that:
- 57% of all practitioners, including solicitors and those helping clients with estate and wealth planning, have observed instances of financial abuse or suspected financial abuse. A shocking 70% of UK practitioners had observed this.
These instances include cases of lasting power of attorney coercion. This is when an unscrupulous family member, friend or fraudster tries to force a vulnerable person into appointing them as a representative. This gives them the right to make decisions about their money and financial affairs, and even sell their property.
Other key findings from our global audience are that:
- 40% of those surveyed by STEP said that instances of financial abuse have increased in the last two years
- 54% agree that safeguarding around lasting powers of attorney needs to be strengthened to better mitigate abuse
- 82% expect the demand for mental capacity advice to increase over the next five years.
Emily Deane TEP, Head of Government Relations at STEP, said:
“When people lose mental capacity, they are also at higher risk of financial abuse. Sadly, much of this abuse will go unnoticed and unreported. While it is heartening that so many practitioners (76%) reported they are confident that they can recognise signs of financial abuse of a vulnerable person, the public need to be better informed about these risks.
We urge people to seek expert legal advice and appoint only the most trusted family members, friends and/or legal professionals to act as their representative should they lose mental capacity in the future. Planning ahead means that people can help ensure their wishes are followed and will help reduce the risk of financial abuse.”
The report looked at growing mental incapacity issues among an increasingly ageing population. Cases of dementia are set to triple by 2050. In the UK alone, there are more than 900,000 people living with dementia and The Alzheimer’s Society estimates that this will rise to 1.6 million by 2040. Alzheimer’s Society Knowledge Services Manager, Jaina Engineer, said:
“Currently, 900,000 people live with dementia in the UK. With this number set to rise, this report highlights the importance of planning ahead for a time when people may no longer be able to make decisions for themselves. This report also shows the importance of a lasting power of attorney (LPA). The role of attorney carries huge responsibility, and sadly there is scope for abuse. It is vital that the attorney is someone the person trusts.
It’s encouraging to know so many professionals are able to spot the signs of financial abuse, but we welcome the report’s key reflection that more must be done to alert professionals and members of the public to signs of financial abuse; and the need for robust safeguarding frameworks. We also welcome STEP’s aspiration to improve cross-border recognition of LPAs, which will benefit an increasing number of families whose assets are spread across different countries.
At Alzheimer’s Society, we strongly encourage everyone to plan for the future as soon as they’re able to after a dementia diagnosis, to ensure that their wishes are respected and they’re able to spend quality time with loved ones.”
The Loss of Mental Capacity report found that financial abuse is most prevalent when there is uncertainty about whether a person lacks mental capacity to make a decision (40%), or when a representative is exercising their authority on behalf of the person who no longer has capacity (36%).
The report also raises concerns about:
- Lack of or inadequate monitoring of the vulnerable person’s representative (64%)
- Lack of public awareness, education or vigilance (59%)
- Lack of or inadequate systems in place by financial and other institutions to prevent fraud (45%).
STEP is urging the public and practitioners to be vigilant for warning signs if they know a vulnerable person who could be a target of abuse. In the meantime, they are discussing these serious concerns with the Office of the Public Guardian (in England and Wales), which is reforming its lasting power of attorney process and system.